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Why Economics
Early Version
“Management
“Planning, organizing, directing,
coordination, and controlling“
“The function of getting things done through
others”
“Economics”
“Household Management”
“Nature and Scope of Wealth of Nations”
The Economic versus Management
approach to wealth creation
(Primitive Perceptions)
ECONOMICS:
• Market allocates resources through price
mechanism
• In economics there is no role for
management- the market allocates
resources efficiently
• Economics is the view of business activity
from afar - the "market" perspective
The Economic versus Management
approach to wealth creation
(Primitive Perceptions)
MANAGEMENT:
• Wealth is created through collaboration of people
and technology
• Economy and markets (competitors), in
management, are only part of the external forces
or constraints in which management attempts to
create wealth.
• Management is popular world-wide in business,
government, and non-profit organizations simply
because it has been successful (Drucker).
Changed Version
“Management“ - Drucker
Management is an economic activity by
which resources are used to create wealth
“Economics”-Robbins
The study of choices made by people who
are faced with scarcity of resources
BUT
In the world of “changing environment”, the
success depends on “anticipation” and “cope” with
change.
Micro Environment
Macro Environment
Business Environment
Analyzing & Responding to The
Economic Environment
Social
Economics Culture
Personnel
Product
Finance Needs Acctg.
Consumer place Technology
Political Price Wants
Legal
Promotion
Production
Monopoly Pure Competition
Microeconomics
Definition:
The study of the choices made by households,
firms, and the government, and how these
choices affect the markets for all sorts of
goods
and services.
Producer-Maximize Profit
Seller-Sales Revenue
Command economy
Mixed Economy
Economic Role of the
Government
•
Product Mkts
Input Mkts
Marginalism
Scarcity- The root cause of economic
problem.
Opportunity Cost
A concept of choosing one alternative
among various. It gives the idea of next
best alternative use.
Macroeconomics
Definition:
The study of the nation’s economy as a whole
YES
Because
•Predicting the economic environment in which
managerial decisions are taken is crucial to the success of
an organization
ORGANIZATIONAL CONSUMER
MARKETING STRATEGY EXPECTATIONS
Product - Income
Price - Job Security
Promotion - Product Prices
Phys. Distr..
MARKETING
MANAGER
DECISIONS
- Risk Level
- Capital Expenditures
- New Product Creation
Choice & Real Cost
Unlimited consumer wants Are greater than
Consumers cannot satisfy all their wants & have to make a choice.
E Financial Management
C
O
N Business Strategy
O
M Export Marketing
I
C
S
Operations Management
vior
Consumer beha
ns um e
Propensity to co
r s tan ding d em and
Und e
d
Creating deman
Pricing decisions
ema nd fo r ec a s ting
D fe ren tiation
Pro d uc t dif
g th e financial system
Un ders tandin
Cost functions
th e m onetary policy
Unders tand ing
ale
Economies of sc
Bank rates
Shutdown point
Repo rates
Break-even point
Understanding competition
Basis for international trade
The barriers
le p r oportio ns
v ar ia b
The laws of
o f r e tu r ns to scale
Laws
oint
Shutdown p
Thank You